All Forum Posts by: Oleg Malkin

Thanks, Michael! As always, the most detailed and complete answer from "The Black Belt in Real Estate Taxation".

That's exactly how I imagined it worked. 

Thanks @Dave Foster. I realize you are an expert on 1031 but perhaps "interest tracing" concept is less common... If I sell a property the loan is paid off if the loan is tied to the property. With interest tracing the loan is against another property(my primary) but it was used to acquire the property I am 1031 exchanging out of. The interest was expensed for years. If the property is sold, the loan is still there against my primary. I assume that for tax purposes in the 1031 scenario, just like the basis and depreciation gets transferred to the new investment property I can continue expensing the loan interest to the new property (because it was used to acquire the original investment). 

Cashed out on a primary to buy an investment when the rates were good. If I sell the investment and 1031 into something else, I can just continue expensing that mortgage interest on the next investment?  Are there any nuances to interest tracing and 1031? As long as I do the 1031 properly (intermediary and all) and don't touch the sale proceeds, nothing changes from the interest tracing perspective? Or is 1031 not even required to keep tracing - like if I don't identify a replacement within 45 days? Seems like  a good way to save a low interest mortgage.  

interested

 If I do that, obviously the exceptions will be removed and next year I get a $4K bill. I was just wandering if anyone actually has experience with this. I'm sure this happens all the time and perhaps HCAD does not go back in time to recover the difference for the exception.  

Bought a property last year in Houston that previous owner had the over-65 exception property tax on. Obviously makes a big difference on property taxes (close to $4k in my case). District still has not updated owner info and it still seems to have the exception. Owner moved out of state and doesn’t care (told me). What will happen if I wait another year before letting HCAD know that I own this property? Do they assess penalties and ask for money back later? Anyone has actual experience with this with HCAD?

@Michael Plaks

Yes, BP forum seems to be the only way to ask Mr Plaks a question in today's environment...:)

Thanks, that’s very helpful.

“If in the meanwhile you have gains from another rental property, for example from selling one, you can apply these losses against gains from other properties. “

Just to make sure I understand…only against capital gains from another property but not against passive rental income from another rental property? I though I read a post here from Brandon Hall about a “grouping election” (with other rental properties) where suspended passive losses can be used to offset passive rental income… or something along those lines. I may be getting things confused.

Greetings! Here is a scenario: I bought a third rental, placed it in service, and it is expected to have have significant repairs in 2021 that will likely lead to passive losses that will be carried forward into the future (due to income limitation). If we end up converting this property into a primary residence in 2022, what happens to these passive losses? Can they be carried forward to offset passive income from the other two rental properties or are passive losses somehow tied to each specific property?

I mean the pattern could be: purchase, lease back, make repairs, attempt to rent out unsuccessfully, then occupy as a primary residence...

Property was held for the production of income for a few month, tenant moved out, you thought you could charge higher rent by making repairs and then rents were not where you thought they would be and owner moved in.

Even if everything happens in the same year and you end up with the same address on the return for the primary residence and the rental? I know nobody has a 100% answer but can that be a red flag?